Should we consider pegging HBD to gold instead of the US Dollar?
It's been a rough day for all of us here in the crypto world. Bitcoin dropped just below $111,000 earlier today, dragging down almost all of the alts including Hive. The good news is that the bleeding seems to have stopped and buyers are taking advantage of buying the dip. Another major plus is that the support of $110,000 is still in place!
From coingecko.com
In the header today you can see a gold round composed of one ounce of Troy gold celebrating Bitcoin. Yes, that is a real item and can be purchased at most big precious metal dealers. I included a link to APMEX in the references section if you are interesting. That's where the image comes from incidentally. When I saw this gold round this morning it got me thinking about some posts I've read here not too long ago.
Over the last few months I have seen an interesting idea pop up sporadically in posts. Would it be advantageous to peg HBD to gold rather than the US dollar? After all, gold has been doing much better than the dollar and has been for a very long time. Just to give you an idea, below is a chart of the price of gold in US dollars over the last one hundred years. Gold is the clear winner.
From macrotrends.net
In the next couple of charts you will see the value of the US dollar in terms of gold:
From pricedingold.com
On the above chart that measures the value of the US dollar in mg of gold, you can see some very dramatic decreases in the value of the US Dollar starting in 1933 and even more so in 1971. Why? In 1933 President Franklin D. Roosevelt took the US off of the gold standard domestically to help with the great depression. It didn't help to say the least... Then in 1971 President Richard Nixon took the US off of the gold standard internationally and the dollar's value began to drop like rock.
From pricedingold.com
Then from 2006 until the present you can see the steady decline of the dollar value when measured in value to mg of gold. It's not a pretty picture. In 1900 one dollar was worth around 1,500 mg of gold, now it's worth less than 10 mg of gold. Fiat not backed by anything is in the end, just paper.
Should HBD be pegged to gold instead of the US dollar? It's a fascinating concept as gold is more stable, but is it likely to happen? I would venture to say no. Getting enough people on board would be next to impossible, but in my view is worth exploring and could be beneficial. After all, the dollar will just get weaker yearly as inflation continues to erode away it's value. The US national debt continues to climb as well at unsustainable rates, also not doing the dollar any favors.
Personally I would advise everyone to invest in at least some precious metals in addition to crypto. Both are a great way to build your personal wealth, the metals may be harder to store but will always have value. But if you invest solely in crypto and there is a major power outage for weeks or months, your crypto won't do you much good. You'll be grateful you have the precious metals at that point!
That will wrap up my post for this Monday. Please feel free to chime in your thoughts in regards to what should be used to back HBD. As always, thank you for all of your support, and I appreciate each and every one of you here on Hive. Have a great week everyone!
References:
https://www.apmex.com/product/247334/1-oz-gold-round-bitcoin
https://pricedingold.com/us-dollar/
Disclaimer
I am not a financial planner and this isn't financial advice. Please always do your own research before investing your money. You worked hard enough to earn it!
Header image from APMEX.com
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Why peg our HIVE to a broken currency? Instead of HBD, let's make HBG: Hive Backed Gold! Where do I sign up? !BBH
It's a smart idea don't you think?
!BBH
!PIZZA
I kinda agree that if you want to do something like Hive Backed Gold, it should be a separate token. The mechanisms stabilizing HBD seem to have been effective so far, so this should also work for gold
Except the gold pegged token would become more valuable over time as the HBD decreases in value! Running in parallel might be an interesting experiment!
!BBH
!INDEED
Would be funny to then make a HBG-backed dollar stablecoin - HBGD!
No it wouldn’t, it would break immediately.
!PIZZA !ALIVE
Nobody wants a token that’s not backed by real value. A peg via a stabilizer wouldn’t work.
And gold backed crypto’s r silly too. The whole purpose is not needing to trust a third party. It is the wiser of both worlds, U don’t hold the metals , and u have to trust a centralized third party on other side. People will learn hard way. The only mainstream gold backed crypto keeps there gold at the Canadian mint 😅. Defeats whole purpose
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I wouldn't say that "nobody wants" this. A lot of people actually appreciate having exposure to the price, without caring about the backing. That's why cash-settled futures exist. But then again, in a (hypothetical) scenario of a HBG, each token would be backed by 1 ounce worth of HIVE, a liquid token, no?
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Greetings, friend. I love reading your reviews because I learn a lot. Good luck with your projects.
I'm glad you enjoy my posts, and thanks for the complement!
!BBH
!LADY
!PIZZA
Yeah, I think the unit bias would kill most people.
They just don't understand the innate weakness of the dollar, and it's getting worse day by day...
As a precious metals guy myself, I personally like the idea. But like you said I think it would be a hard sell. Also, that's a sweet gold round, I've got a silver one with the same design. Wish it was a gold one though. lol.
The gold one is really sweet, I wish I had one too. I have a silver one stored away somewhere as well. I think it would really be a net positive for Hive, the dollar isn't what it used to be even five years ago. Keeping any large amount of cash sitting in an account is a loser, it's better invested in gold! But we are both gold guys!
That's an interesting idea, since this can be done in parallel for a while, and compared, just for testing purposes, it could be called HBDg or HBG 😎
That's a great idea! I think it would be a big improvement on our current token which is tied to a declining currency.
How would you rate it? 1 HBD worth $1 in gold as the initial value? Or something else?
Maybe to a certain weight of gold, maybe 10 mg which is worth $1.08 right now.
👍
What’s point ? There wouldn’t be any backing, just a fake peg that would crush Hive to artificially try to keep said peg.
Pegging HBD to Gold is interesting!🤔
You are probably correct we wouldn’t be able to get enough people on board……
I see the bleeding on Bitcoin has stopped for the moment, although September is usually a tough month for crypto.
Just before the blastoff later on in the year!👍🤗
Or start a parallel token as an experiment worth 10 mg of gold to start! Much better than anything pegged to the dollar! BTC dropped below $110K briefly, but went back up so support still feels strong at $110K. However, Hive is now sub twenty cents...
It’s been a strange crypto cycle….😮
Some are forecasting the end of the cycle at the end of this year.
I guess we will soon find out how this all plays out!😇
It wouldn’t work function wise anyway.
Probably true my friend! 👍😇😊
Let's have a separate token, @thebighigg. You and I have gold!
!BBH
!LADY
!PIZZA
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The gold all the way for us @silversaver888 ! Very well put!
!BBH
!LADY
!PIZZA
Hell No! This is the most ridiculous idea ever! U need a third party to store Gold and it doesn’t work in crypto. It defeats whole purpose for being decentralized and not needing to trust a 3rd party. The most funny thing is most these good back crypto’s do is store the gold at a government mint 🤣
A peg with no backing but just an artificial stabilizer type thing would also be silly. The purpose for HBD was always so we’d get a portion of rewards in liquid value we could reply on regardless of Hive movements. Changing HBD to a physical commodity without backing type thing would be a mess and total fail fast.
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I think having both PMs and Crypto is a great idea. The more bases covered, the better! Then adding other assets that can help us through what could be a rough transition like Long termed storable food, maybe a weapon to protect your home fro thieves and robbers. In doing a little soft prepping I compiled a list of course...
Gold ✔️
Silver ✔️
BTC ✔️
LTC ✔️
HBD ✔️
Shelter ✔️
First aid supplies ✔️
Personal Weaponry ✔️
Emergency rations ✔️
Heritage seeds ✔️
Water Purification ✔️
Solar Power Generator ✔️
Electric Vehicle ✔️
Hair dryer ✔️
"In Omni Paratus." In all things be prepared.
Hasn't USDT started a partial gold backing on top of a US Treasury Bill backing?
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Problem with this idea is if price of gold constantly goes up in value over time, it could easily put HIVE way over the debt limit for an indefinite amount of time, possibly even forever.